Competition for aid and trade policy
AbstractThis paper considers the optimal allocation by a donor country of a given amount of foreign aid between two recipient countries. It is shown that, ceteris paribus, a country following a more restrictive trade policy would receive a smaller share of the aid if the donor country maximises its own welfare. If, on the other hand, the donor country maximises the sum of the welfare of the two recipient countries, the result is just the opposite. We also analyse the situation where the recipient countries compete with each other for aid taking into account the behaviour of the donor. It is shown that this competition tend to lower the level of optimal tariffs in the recipient countries.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of International Economics.
Volume (Year): 43 (1997)
Issue (Month): 3-4 (November)
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Web page: http://www.elsevier.com/locate/inca/505552
Other versions of this item:
- Sajal Lahiri & Pascalis Raimondos, . "Competition for Aid and Trade Policy," EPRU Working Paper Series 94-12, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Sajal Lahiri and Pascalis Raimondos, . "Competition for Aid and Trade Policy," Economics Discussion Papers 433, University of Essex, Department of Economics.
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